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Opinion column: Living within a budget

Posted: Wednesday, Dec 12th, 2012




Reading in a magazine for the older generation, I found an article that has some important lessons for the younger. It was talking about a new trend in housing developments in the big city. Because of the information in the article, I went on an investigative search.

Looking online, I find that the recommended percentage of oneís net monthly income should be no more than 30 percent spent for housing. That housing allowance includes money spent for repairs, upkeep and utilities. That means (roughly), if you bring home $1,000 a month, you should spend no more than $300 for your total housing expenses. Your actual rental payment should look more like $225 plus the utilities.

It is pretty difficult to find a place to live that stays within that ratio. That article in AARP magazine talked about American cities looking into allowing small apartment units that are like those found in Tokyo and Paris. San Francisco is considering reduction of the legal minimum apartment size to 220 square feet. Expected rent would be from $1,200 to $1,500 instead of $2,075 for a studio.

I sat down and did some calculating. Roughly estimating that would mean, taking the low-ball rental price of $1,200, you would have to bring home $6,000 a month, or $3,000 each for a couple, where both worked (if the zoning would allow a couple to live in such a small area). At the average hours per month, for full-time employment, that means they would have to earn about $24.43 an hour, before taxes. For an individual, he or she would have to earn about $48.86 an hour, before taxes. That means each wage earner would have to have an annual salary of $48,000 for a couple, or $96,000 for an individual.

I then looked online at the job market in San Francisco. One place was looking to hire a senior level litigation paralegal with a pay range from $75,000 to $80,000. A certified electrician was $38,000 to $54,000. A lower, but more average-paying job, was a receptionist/tech support, which paid $12 per hour.

For the low-paying line of employment, one would have to have four people sharing the same micro-apartment to be technically living within the recommended budget! A couple of certified electricians could swing it, if they were in the higher pay bracket for their line of work. Even the paralegal, a little short of a lawyer, would not be earning enough to responsibly live within the recommended budget unless he or she married a receptionist.

Now, letís apply these calculations to living in a small Wyoming town. Many of our children grow up thinking how glamorous it would be to move to the big city. As soon as they graduate, they set their sights on moving to the city.

They think it will be so wonderful to live with all the big city attractions. Little do they realize the cost-of-living ratio. Living in a small Wyoming town has that beat hands down. Of course, the pay is much lower, but from looking at the San Francisco pay rates, the higher pay isnít near enough to offset the much higher cost of living. In Wyoming, there is still a hope for a better future. In places like San Francisco, living on credit cards, till that reaches its grand finale, looks like the unfortunate destination for too many starry-eyed youth.

For any youth reading this article, remember that the dollars per hour is not the only thing to consider when planning for your future. There are many hidden costs of living you will yet discover.

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